Rhodes surviving despite cash crisis

Rhodes University was a going concern which was not about to close down, said vice-chancellor Dr Sizwe Mabizela.

In a letter to alumni responding to recent reports that the university faced a financial crisis, Mabizela said the current strain the university faced was not unique and was being experienced by most public universities.

“Given its smallness, Rhodes University is particularly vulnerable and sensitive to changes in its funding streams that are a result of the fiscally strained national environment in which we find ourselves.”

He painted a bleak economic context within which universities had to function.

The official unemployment rate stood at 26.7%, the economic growth rate was just 0.2%; 11million of South Africa’s credit-active consumers were over-indebted and some 16.9million South Africans relied on state grants.

South Africa also had one of the most unequal societies in the world.

Universities were chronically underfunded.

Government subsidies had dropped from 50% in 1994 to 40% in 2014, while the student proportion of higher education funding grew from 20% in 1994 to 31% in 2014.

“This decline in state subsidy has forced universities to increase the student fee income in order to maintain the quality of the educational experience of students.”

Unsustainable fee levels had sparked student protests in 2015.

While enrolment in the higher education system had doubled from around 500 000 in 1994 to about one million in 2016, the number of fee-paying students – as a proportion of the entire public higher education enrolment – had dropped significantly.

Some 405 000 students are funded by the National Student Financial Aid Scheme (NSFAS) but the level and extent of this remained inadequate.

The demand for NSFAS funding outstripped the available resources by far.

Government had placed a moratorium on fee increases for 2016 and had provided just R1.9-billion towards the resulting R2.3-billion shortfall.

“All public universities are experiencing considerable financial hardships. Some have embarked on austerity measures and others have offered their staff voluntary severance packages.”

Mabizela said to assist students Rhodes had done away with its 50% minimum initial payment (MIP) and replaced it with a 10% registration fee.

Students then had to make payment arrangements for the balance of 90% of their fees.

The university’s cashflow – previously covered by the MIP – had been put under severe strain.

Students reneging on their fee payment arrangements had made matters worse.

It was in this context that the university decided to withhold the results of fee defaulters.

By mid-July more than half of the 1616 fee defaulters had paid some R12-million or made appropriate payment arrangements with the university and their results were immediately released, he added.

Mabizela said another zero percent fee increase in 2017 would place higher education institutions in an even more precarious position, unless the state again provided shortfall funding.

“Our nation, and by extension our higher education system, is experiencing unprecedented fiscal strain.”

He assured alumni the university was developing a financial sustainability plan that would seek to ensure the university remained a centre of academic excellence.